What is business insurance?
Business insurance is a type of cover you can take out that protects you and your business against certain losses you might face during every day operations.
Is business insurance a legal requirement?
The only type of business insurance you’re legally required to have is employers’ liability cover – and this is only if you employ your own staff.
Do I need business insurance?
While employers’ liability cover is the only type of legally required business insurance, some business regulators may also want you to have certain policies in place before they let you practice. For example, you might have to take out professional indemnity insurance if you’re a solicitor or an accountant.
If you work with other companies or clients, they may also request that you’ve taken a particular level of cover before signing a contract with you.
What types of business insurance do I need?
Business insurance comes in a number of variations, and the policies you’ll need will depend on your business and how you run it as well as the provider you choose. Most offer cover for the following:
- Public liability: Public liability insurance covers you for the cost of compensation you might have to pay if a member of the public is injured or their property is damaged as a result of your business’s operation
- Employers’ liability: As mentioned above this is a legal requirement if you employ staff, and it’ll cover you if your employees become injured or ill or have their property damaged as a result of the work they do for you
- Professional indemnity: Professional indemnity policies protect you if you or an employee makes a mistake with your work and as a result your client or the business you’re working with lose money and sue you
- Business buildings: Business buildings insurance can be helpful if you have a specific business premise, such as an office or shop, as well as if you work from home. It can cover you for damage caused by floods and other natural disasters, depending on the details of your policy
- Business contents: A business contents policy covers any tools or office equipment in your business premises if they’re damaged, stolen, or lost
- Product liability: Product liability insurance is cover for when a customer is injured or suffers damage due to a faulty product you’ve supplied – you could be liable even if you didn’t manufacture it
- Business interruption: With business interruption insurance you’ll be covered for the cost of getting your business up and running again if it’s disrupted by an insured event, such as flooding or fire
- Personal accident: Personal accident cover means your insurer will pay out for things like medical costs or loss of income if someone dies or is seriously injured at your work premises
- Legal expenses: A policy for your business’s legal expenses means you’ll be covered for the potential cost of legal action if someone brings a case against you or vice versa
- Cybercrime: A policy that’s growing in importance in the modern age, cybercrime insurance protects you if your business falls victim to cyber criminals
Can I get business insurance without a trading licence?
You’ll generally be able to take out a business insurance policy before your business actually starts trading if you don’t have a trading licence. However if you don’t have the right paperwork in place by the time you start trading, this could invalidate your insurance policy so you won’t be able to claim.
How much does business insurance cost?
The premiums you’ll pay to insure your business will depend on a number of factors, including:
- Your industry: certain lines of business carry higher risks, especially if the work involves heavy machinery or interacting with the public
- The size of your business: bigger businesses are likely to have more at stake when it comes to legal expenses or potential damaged equipment, so it could cost more to get the level of cover required
- The location of your business premises: If you conduct your business in dangerous or risky locations, or in areas with high crime rates, getting the appropriate level of cover could be more expensive
- Your policy and level of cover: adding policies to your business insurance means you’ll be covered for more eventualities, but you’ll usually need to pay more for the extra protection
Do I need business insurance if I work from home?
If you work from home you might want to consider taking out a business insurance policy – however the exact cover you need will depend on the kind of work you carry out. For example, you might benefit from a public liability policy if you have clients at home, while professional indemnity insurance can be useful if you handle your client’s data.
Do I need business insurance if I’m self-employed?
Business insurance can still be important if you’re self-employed. Policies such as public liability or professional indemnity insurance can still apply if your business deals with the general public or with client data, and if you employ others then employers’ liability insurance will still be a legal requirement.